Mortality Table for Funding

[DavidO]

Plan Year: 7/1/22 - 6/30/23
Stability Period: Plan Year
Assume 100% LS for Funding
EOY Valuation

Using the annuity substitution rule for 430 funding, which 417(e) Applicable Mortality table should be used when valuing the LS? 2022 or 2023?

1.430(d)-1(f)(4)(iii)(B) says to use "the current applicable mortality table under section 417(e)(3) that would apply to a distribution with an annuity starting date occurring on the valuation date".

Thanks for any help with this!

[Lou S.]

BOY or EOY valuation? That should give you the answer.

[DavidO]

EOY Valuation. So you would say use 2023?

The reason I'm questioning that answer is that if the distribution is assumed to occur on 6/30/23 then it falls within the 7/1/22 - 6/30/23 stability period which would be using the 2022 table.

[truphao]

If the distribution occurs on 06/30/2023 the distributions should be already removed from both assets and liabilities.   If the money is still there then I am with Lou.

[DavidO]

It's not an actual distribution. I'm referring to how to calculate the FT for a regular accrued benefit.

When assuming 100% LS, 1.430(d)-1(f)(4)(iii)(B) changes the mortality table to the 417(e) mortality table. If I were to calculate a distribution on 6/30/23 using 417(e) assumptions I would be using the applicable mortality table in effect at the beginning of the stability period (which in this scenario would be 2022).

When valuing a regular annuity (not assuming LS) 430 would calculate the FT using the prescribed mortality table for the year in which the valuation date occurs (2023 in this scenario), but the language in 1.430(d)-1(f)(4)(iii)(B) seems to say that you are valuing the benefit as if you were distributing on the valuation date which would theoretically push you back to the 2022 applicable mortality table.

[truphao]

I understand it is not the actual distribution.  What I was illuding to (since it did not happen on 06/30) make an assumption that the LS will be paid on 7/1/2023.  It is your assumption  , not theirs.  I should have phrased it better first time.

[DavidO]

Interesting approach. Thank you for your help!